NMC Healthcare has discontinued its GBP 2.4bn negligence claim before an English court against former auditor Ernst & Young (EY) for failure to spot fraud, a court order shows.

According to the order issued by High Court’s Mrs Justice Moulder on 29 January, the claimant discontinued its lawsuit by a Notice of Discontinuance on the same day, and the parties have agreed to the terms of the order. The judge added that, following the discontinuance of the claim, there will be no order as to the damages claimed or as to the costs of the claim, with the parties each bearing their own legal costs in relation to the claim.

The trial of the case in London began on 19 May last year with opening submissions and progressed with cross-examination of witnesses and experts until 31 July. It was then paused until October and, after resuming, ended on 21 October. Judgment was pending.

The NMC group was founded by Indian businessman Bavaguthu Raghuram Shetty in 1975 and grew to become the largest private healthcare provider in the UAE, also operating facilities in Saudi Arabia, Oman, the US, the UK and Spain.

NMC Health plc, the ultimate parent company of subsidiaries forming the NMC group, was listed on the London Stock Exchange from April 2012 until trading in its shares was suspended in February 2020. Between 2012 and 2019, founder Shetty and shareholders Khaleefa and Saeed Bin Butti retained approximately 60% of NMC’s share capital.

After the discovery of indications of fraud by short-seller Muddy Waters, NMC Health plc was placed into administration in April 2020, with Alvarez & Marsal’s Richard Fleming, Benjamin Cairns and Mark Firmin appointed as administrators. 36 UAE subsidiaries were placed into administration in September 2020.

The formerly London-listed NMC group, the largest private healthcare provider in the UAE, collapsed five years ago after the discovery of fraud within the group, triggering several court cases.

Among them, the Alvarez & Marsal administrators brought a lawsuit in London in 2022 against EY for failing to spot the fraud when it carried out its audits of NMC group for the financial years 2012 to 2018.

The administrators were claiming over GBP 2.4bn including interest, which they said will not cover NMC’s total indebtedness.

EY had contended that NMC administrators’ failed to mitigate the healthcare group’s losses when assessing the claim against the auditor, prioritising the lawsuit against EY instead of trying to recover the group’s losses with other claims and adopting a soft approach about everything that had an Abu Dhabi connection.

NMC Health plc was represented at the trial by Simon Salzedo KC and James Shaerf of 39 Essex Chambers, Simon Atrill KC of Fountain Court Chambers, and Tom Pascoe and Chintan Chandrachud of Brick Court Chambers, instructed by Quinn Emanuel & Sullivan UK.

EY was represented by Laurence Rabinowitz KC and Alexandre Polley KC of One Essex Court, Thomas Plewman KC, Edward Harrison KC and Vanshaj Jain of Brick Court Chambers, and Katherine Ratcliffe of Essex Court Chambers, instructed by partners Rupert Boswall, Davina Given, Dan Hemmick, Charlotte Henschen of Reynolds Porter Chamberlain.

The case is CL-2022-000218 NMC Health Plc (In Administration) v. Ernst & Young LLP before the High Court of Justice, Business and Property Courts of England and Wales.